Mitsui O.S.K. Lines, one of Japan’s biggest shipping groups, said on Wednesday it planned to scrap or lay up 10 to 20 of its large capesize vessels as conditions in the dry freight market worsen.

Average daily earnings for capesizes, which usually transport 150,000 tonne cargoes such as iron ore and coal, have slumped to $4,135 this week, a level not seen since December 2008, as a glut of ships, ordered when times were good, has combined with slowing economies around the world.

“Based on the current capesize market conditions, MOL believes that the cold lay-up of approximately 10 ships for six months to a year will help restore an appropriate vessel supply-demand balance in the future. The company has begun selecting vessels and locations for cold lay-ups,” it said.

It also cited “this fiscal year’s worsening market trends”.

A lay-up is when a ship is taken out of service, with some or all of the crew taken off. In a cold lay-up, a ship is mothballed, with only dehumidifiers to keep it from deteriorating.

MOL said that until now the company had scrapped capesize ships that were at least 23 years old and that it would reduce the cut-off age to 15 years or older.

“MOL has plans to scrap five vessels by the end of March 2013 and is considering the disposal of others,” it said. “The company scrapped four vessels and temporarily laid up 10 others last year.”

The capesize sector has been on a downward slope due to weak iron ore demand in China, and the MOL cuts are not likely to make much difference, analysts said.

“Although a positive in terms of limiting supply, the capesize fleet stands at 1,450 vessels, and 10 to 20 vessels make up a fractional 0.5-1 percent of supply – hardly anything that will provide comfort to the market,” said Arctic Securities analyst Erik Nikolai Stavseth.

“Given the current situation in dry bulk and capes in particular, we would expect more lay-ups and scrapping as the near-term fundamentals remain weak.” -By Jonathan Saul